British finance minister George Osborne, fresh from May's election victory, announces plans to reshape the economy. As Ivor Bennett reports they'll include chopping welfare spending and easing the tax bill for workers.
There wasn't much of a smile, but for George Osborne this was a moment to savour. The first all-Conservative Budget in nearly 20 years, the British Finance Minister was always going to make the most of it. SOUNDBITE (English) GEORGE OSBORNE, BRITISH FINANCE MINISTER, SAYING: "A budget that sets out a plan for Britain for the next five years, to keep moving us from a low wage, high tax, high welfare economy, to the higher wage, lower tax, lower welfare country we intend to create." But that of course means cuts, and we now know where the axe will fall. Student grants will be scrapped, tax credits and housing benefits chopped. Osborne hoping to save 12 billion pounds by 2020. Certainly not popular with everyone, but according to IG's Chris Beauchamp, the Chancellor is on the right track. SOUNDBITE (English) CHRIS BEAUCHAMP, MARKET ANALYST, IG, SAYING: "I think the measures he's announcing today will continue to solidify Britain's recovery really. It's become far more self-sustaining, particularly in the past year. You've seen those wage increases starting to pick up which I think is the big missing piece of the economic puzzle." Britain's economy is due to grow by 2.5 percent this year, according to the Bank of England but it still has a budget deficit equivalent to 5 percent of its output. Something Osborne wants to eliminate within five years. So on top of welfare cuts, he's scrapping the permanent non-dom tax status. And introducing a new 8 percent surcharge on bank profits in January. Something to replace the bank levy that will gradually be phased out, perhaps in the hope of keeping HSBC in Britain Storm clouds could be gathering though. The trouble brewing in Greece potentially blowing this way. SOUNDBITE (English) CHRIS BEAUCHAMP, MARKET ANALYST, IG, SAYING: "I think it will continue to weigh on us quite considerably and I think that's what you're seeing from the likes of Mark Carney, already saying that actually, the economic recovery isn't quite as strong as they might have liked in terms of interest rate increases. And that we'll still continue to feel the unfortunate effects of that euro zone crisis." And then of course there's the fear of a 'Brexit'. David Cameron is biding his time to bring up Britain's relationship with the EU once again. But when he does, it's sure to be felt. No wonder his chancellor is making hay whilst the sun shines.